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Break-even Calculator and Margin of Safety

FreeAbout three minutesProfit and margins
What it does

Calculates the revenue that keeps your doors open and how far above that line you currently sit.

How it helps

Knowing your break even and your buffer changes how calmly you make decisions. This shows both, banded against a healthy margin of safety for your industry, so you know how much room you really have.

How this benchmark is calculated

This benchmark is indicative only and reflects ProfitPulse's internal commercial ranges rather than an external survey. Read it as a practical guide, not a formal industry survey and not financial advice. It is tuned to your broad industry, your scale and your commercial complexity rather than applied flat.

In about three minutes, free, you will see their break even revenue by month and year and their margin of safety, banded against a healthy buffer for their industry.

Break-even and Margin of Safety

Answer a few quick questions to see where you stand.

How the break even and safety margin is calculated

The formula

Break even revenue = fixed costs divided by your gross profit margin. Margin of safety = revenue minus break even, divided by revenue, times 100.

Worked example

With 1,000,000 dollars revenue, a 40 per cent gross margin and 300,000 dollars of fixed costs, break even is 750,000 dollars and the margin of safety is 25 per cent.

How to read your result

Well clear means you can absorb a slow patch and move on opportunities. Worth a closer look means the buffer is thinner than ideal. Significant opportunity means you are close to the line, so finding the margin leak comes first.

What each figure means

  • Revenue for the last 12 months: Your total sales for the period, before any costs are taken out.
  • Gross profit for the same period: Revenue minus direct costs or cost of goods sold. Do not include rent, admin wages or general overheads.
  • Fixed costs and overheads for the same period: Overheads you carry whether or not you make a sale, such as rent, admin wages and insurance.

Common questions

What are fixed costs?

Overheads you carry whether or not you sell, such as rent, admin wages and insurance.

What is the margin of safety?

How far your revenue sits above the break even line, expressed as a percentage. More room means calmer decisions.

Why does break even change?

It moves whenever fixed costs or your gross margin change, so it is worth recalculating through the year.

How ProfitPulse can help

If the buffer is thin, our fractional CFO support finds the margin leak first, then builds the forward view that keeps you ahead of the line.

More from ProfitPulse: what our work costs, building cash flow discipline and a fractional CFO in Brisbane.